American Institute of Certified Planners (AICP) Practice Exam

The duration of a capital budget is typically one year because a capital budget focuses on the funding of capital projects and expenditures within a specific time frame. In most instances, governments and organizations plan their capital budgets on an annual basis to allocate resources for long-term investments in infrastructure, facilities, and significant equipment purchases that are expected to last more than one year. This annual cycle allows for the assessment of needs, prioritization of projects, and review of financial performance, ensuring that the capital projects align with the overall strategic goals of the organization.

While some organizations may prepare long-term capital plans that outline projects over a more extended period, the actual capital budget used for financial planning and resource allocation is typically confined to one year at a time. This annual focus allows organizations to reassess their financial situation and adapt their plans to current priorities and funding availability.